Crowdfunding: A Few Dollars from a Lot of Folks Can Help Launch Your Next Big Project

Do you have a vision for a special creative project? Perhaps a desire to publish your own book? Maybe you’ve written your manuscript, but just don’t have the money to pay for professional editing, cover design, interior layout, website design or marketing. These days when it is difficult to obtain a business loan, where can you turn?

One viable option is crowdfunding. I learned a lot about crowdfunding from Leigh Lepore at the January CIPA meeting so I thought I would share my notes with you.

A Growing Phenomenon

Crowdfunding is a rapidly growing phenomenon. This relatively new online industry has doubled the funds raised every year since 2009, with an estimated $5.1 billion dollars raised in 2013 alone. In just the publishing arena, $40 million was raised for over 5,000 book campaigns.

What is Crowdfunding?

Crowdfunding is a process of raising money for a specific project by having a lot of people putting in a small amount: $10, $25 or $100. You make a compelling video, post it on the crowdfunding site, describe you project, and list your monetary goal. The most successful campaigns have a clever idea or new concept, with a compelling message that may include a problem you’re solving.

Your Video and Rewards

Your 1-3 minute video needs to be interesting and make people exited to help you succeed. Your rewards (what you give back to those who fund your project) need to be enticing, and you need to have a strong social media presence.

Work Your Network

The larger your network of friends, family, circle of influence, the more likely your project will be funded. The more you share about your journey and insights with your online followers, bloggers, journalists and forums, the greater your success.

The Most Popular Crowdfunding Sites

There are several sites that have emerged as the most popular crowdfunders. These are Kickstarter.com, Indiegogo.com, and Pubslush.com. Kickstarter is the most successful site, and focuses on the arts and creative projects. It has a selection process, where your project must meet certain criteria to be accepted. Pubslush is dedicated to publishing books only, and Indiegogo is for funding all types of projects.

Flexible or Fixed Funding?

The crowdfunding sites have a fixed or flexible funding process. A flexible process allows you to keep your funds even if didn’t raise the goal you’ve specified. A fixed funding process doesn’t process the funds until you’ve reached your goal. Platform fees are higher for the flexible process.

Four Types of Crowdfunding

There are four types of crowdfunding:

Rewards: you give a reward to those funding your project. This can be a copy of the book, free consulting, or a thank you letter.

Donation: Your fundraisers do not get anything in return for their donations

Debt: These are loans where you pay back the funds with monthly interest

Equity: Your fundraisers receive a percentage of ownership in your company

Fees and Taxes

Keep in mind the crowdfunding site will get a percentage of what is raised plus collect payment processing fees. This can be anywhere from 4% to 9% for platform fees plus another 3% to 5% for payment processing fees. Also don’t forget about the IRS, who will take up to 30% in taxes. So you may have to allow for up to 44% of the funds raised to pay for fees and taxes.

A Great Reference Book

For more information, check out this Kindle eBook, The Crowdfunding Bible. It was available for free on Amazon.com at the time of this post.

Karen Saunders & Associates delivers the guidance, skills, and team of experts to make your dream to self-publish your book or brand and market your new small business a reality. If you’re an author or self-publisher or you’re a new professional speaker, corporate consultant, life coach, or business coach – ready to self-publish your book or brand and market your small business – let Karen Saunders guide you on your path!

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